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retail leases

Westfield mistakes ruin marketing promotion and blocks foot traffic – and offers no assistance

I loved the idea of Super Saturday pitched by Westfield to tenants at Westfield Knox City. We completed the form indicating we would offer 25% off all gifts except plush and Christmas. We did this to be an active participant in a whole of centre sale that they would promote through a catalogue and other mediums.

Whereas AMP, the former landlord, would share with us the marketing material well in advance, Westfield kept it to themselves until the morning of.

westfieldfail1Saturday morning we discovered Westfield didn’t follow our request, they were promoting us offering 25% off everything in-store – not just gifts as we indicated. The poster, catalogue and other materials were all wrong. Someone from centre management visited after we contacted them but he offered no solution or compensation for the mistake by Westfield.

westfieldfail2Also on Saturday, Westfield setup a series of outposts and signs out the front of my shop in such a way that they blocked the usual and natural flow of foot traffic from the car park across to the newsagency. The photo does not show how bad the Westfield layout was. Not only did it block traffic, the door outpost was dangerous with people (myself included) tripping on the base of one of the stands. Again, the person from centre management offered no solution.

One outpost was a kids activity area. The centre management guy said it’s bringing people to centre. I doubt that. It was blocking access to my shop. I need access to make sales and pay the rent. That argument appeared to be lost on this guy.

I asked for the centre manager to contact me, they have not yet done this.

I was angry Saturday when I saw the marketing screw up and the traffic diversion because this was to be Super Saturday, the landlord had let us down and upon showing them this they offered no assistance. This same landlord takes a zero tolerance approach to stepping over the lease line and other matters yet they do not hold themselves to the same standard.

What I would have liked is a free spruiker at the shop to attract people walking past because of their barriers and someone pitching the actual offer we had and not the mistake on their posters and in their catalogue.

If they read this blog post they will most likely complain to me and step up ‘compliance’ visits to the store. It’s happened with landlords before. You screw up and they attack, you complain about their screw up and they attack. This is life in a shopping centre.

I decided to not blog about this Saturday or Sunday as I was too angry. The post I wrote in my head was full of venom. While am still angry this morning, the passing of time has dulled the anger somewhat.

Saturday was okay for us, not what we expected, but okay. It would have been much better had Westfield not screwed up.

Westfield needs to look carefully at what it does in its centres at busy times like Christmas.  While they run feel good promotions, they often don’t result in shoppers visiting shops. They fill mall areas with outposts from short term tenants often not represented in the centre and who pull focus from their long term tenants who pay the bulk of the rent. They make mistakes on promotions and don’t fix them. They rarely work with you on programs that will work for your business.

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retail leases

Negotiating a high street lease with the landlord

I have recently negotiated a lease extension with the landlord for a high street retail business I own and share the story here.

I nominated that I wanted to take up the extension permitted in the current lease. This triggered a market review opportunity for them which they embraced. The landlord engaged a single local real estate agent who came back arguing for a 10% increase with little hard evidence.  The double-digit rental increase was put to us by the solicitor for the landlord.

With the solicitor being difficult to deal with, I went back to the landlord explaining that I felt a fairer increase would be 5%. I explained that I had the option to reject their proposed increase through a more formal channel but would prefer to negotiate a middle-ground solution both parties could live with. I refused their argument of evidence form one real estate agent as being sufficient and reinforced that we had always paid on time and have been good tenants.

I was certain that QCAT would reject the landlord’s use of a single real estate agent and that the letter from the real estate agent did not, of itself, represent a fair market review.

After a couple of weeks consideration of my middle-ground proposal and several emails from me restating my case, the landlord agreed to the proposal of a 5% increase. While no increase can be considered to be good, it works in this situation. The business is tracking well and can digest the increase with much of what we sell not being fixed-price. Our approach is to chase more traffic, get existing traffic buying more and increasing our margin on all items through small steps on price.

I wanted to write about this today to encourage newsagents facing lease negotiations to be fair in their discussions with landlords, to always copy the landlord on any letter to their solicitor and to be clear in understanding what your next steps could be if you were to take a more formal dispute resolution approach.

While having a landlord who is committed to fairness is important, I think we can facilitate this in our approach to them when negotiating. They are entitled to ask for whatever increase they like. It’s where we end up that matters most.  Where we end up often depends on how we approach the negotiation.

Negotiating a lease with a high street landlord is completely different to negotiating with a shopping centre landlord.

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Newsagency challenges

Newsagents in the news on shop lease

Check out the story in The Morning Bulletin in Rockhampton about the closure of two newsagencies.  It’s a reminder of the importance of getting rent right from the outset and not agreeing to lease unless you are 100% happy.

I have recently walked away from two new lease opportunities because the terms were not what I wanted. A newsagency opportunity I walked away from three years ago because the terms were not good is, I’m told, about to close because the tenants are walking away from a ‘bad’ lease.

Get the lease right at the start. Changing it mid-term is challenging with most major landlords.

A side point about the story is the headline: news agents. Talk about focusing on the agent part. I bet agency business accounted for only a small portion of sales in this business.

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Newsagency challenges

Retail should close all Anzac Day

Anzac Day is like Australia Day. Aussies like to be home, at the pub or enjoying outdoors at a BBQ. Most of them don’t want to be shopping. Those of us in a major shopping centre don’t have the luxury of choosing to not open. It’s expensive and usually loss-making.  Politicians supporting families would declare these two days non-retail days … we’d all benefit.

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retail

Beware offers of lease negotiation help

A range of people and organisations offer to help newsagents with lease negotiation. I urge newsagents to do their research before signing on with any party making such an offer.

Ask for recent references and do your own research.

One newsagent recently found that the party they were paying to represent them was negotiating for another party to take their lease and business.

It is one thing to face a competition head on and another entirely when your own ‘family’ is stabbing you in the back.

Bottom line: when it comes to lease help, do due diligence and ensure that claims being made are truthful.

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Ethics

Be careful about newsagency lease advice

I was talking with a newsagent last week who made some business decisions based on the offer of free lease negotiation assistance.  The lease advice assistance did not work out and the business has been lost.

Negotiating a lease is tough.  It requires a professional fact-based approach with accurate business data at the core.

Since the landlord is in control and makes the ultimate decision, it is not possible for anyone to promise a certain outcome. The best that can be put is an offer to support the newsagent in making the pitch to the landlord. The best support is in the form of a professional proposal.

The key is for the newsagent to be involved at each step of the way, alongside the advisor, the person offering assistance.

Leaving the job to someone else entirely is a risky move as you don’t know what is being said or whether they have an agenda other than what you need for your business.

If you’ve been offered lease advice or assistance, be careful. Agree on a process that keeps you fully engaged and which has your business needs at the forefront.

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retail leases

A change from some shopping centre landlords

I have noticed a change in lease terms being offered to newsagents in shopping centres by some landlords. A couple of landlords who were being inflexible on rent are now offering at a more competitive rate. Their approach suggests to me that they better understand the typical newsagency operation and have now factored this into their lease pricing model for our type of business.

This change, if it is more than a one or two off, would be a good news indicator for newsagents and would-be newsagents.

The other change I have noticed is that landlords are more interested than ever in what a tenant will bring to the centre in terms of retail offer and new traffic. They are listening to and considering this. They are starting to discern a difference between the various newsagency banner groups as well as the difference between a newsagency unbranded and one being part of a group.

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retail leases

Negotiating with your retail tenancy landlord

I am often asked by newsagents for assistance with landlord negotiations.  While I am not a lease negotiator, I have negotiated my own leases as well as revised leases to reflect changed market conditions.

I’m happy to share my thoughts with newsagents on why I have done and the goals I pursue so they can consider these in their own situation.

There are some awful leases signed by newsagents out there. Some are leases negotiated by so-called leasing experts. Some are poor leases newsagents paid others a fee to negotiate on their behalf.

The biggest challenge is educating landlords about the value a good newsagency brings to a centre that is often beyond the value of just rent being paid on time. This plus the traditional GP achieved by a newsagency need to be presented to the landlord in a way that they understand and can consider in terms of the total economic benefit to a centre.

A good newsagency is a service in the centre. A bit like a local council office or a government owned Australia Post outlet or the centre management office. Each of these is costed by the landlord on a different basis than traditional retail.

A good newsagency provides some low margin services that are vital to the overall appeal of a centre. On top of that we sell a range of products at margins that are not usual in retail.

A good newsagency also markets the business, and the centre, extensively outside the centre.

These are all factors that need to be presented to the landlord in a commercially appropriate way and with supporting material.  Some landlords listen and respond with an improved rent offer.

Sometimes, newsagents do not get the rent offer they want because they have not made their case fully, professionally or both. Usually, these newsagents don’t want to be told this.

Negotiating a lease or revised lease terms is something to take seriously. You need accurate business data and a sound business case presented professionally and without emotion.

Just because you want a better rent deal is not reason enough for a landlord to give it to you.

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Newsagency management

Another newsagency walks from shopping centre tenancy

Following the refusal by the landlord to renegotiate on rent, another newsagent has walked from their major shopping centre tenancy.  They left behind a shop-fit which was just three years old.  The landlord, following a tradition which emerged in 2011, then negotiated new terms with another party to operate a newsagency in the tenancy.

While some landlords have shown a preparedness to renegotiate terms for newsagents tenants who are doing it tough, many refuse.

When your occupancy costs pass 15% in a shopping centre and continue to rise you are living on borrowed time. The math is simple. With an average gross profit of between 30% and 35%, a labour cost of 12%, rent of 15%, theft of 3% and overheads of 5% there is nothing left to fund business borrowings let alone provide a return to the owner.

Smart landlords understand that much of what is sold in a newsagency is on a fixed margin, at the low end of margins achieved in the shopping centre tenancy mix.  They can see that the prices of many products are not even keeping up with CPI (newspapers, magazines, cards).  They understand the important role newsagencies play in the tenancy mix and the service they provide. These smart landlords are the ones likely to agree to either a rent reduction or to not applying the usual annual 4% to 6% rent increase.

We need more smart landlords.  Otherwise, we will see fewer shopping centres in Australia with newsagencies.

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Newsagency challenges

A good shopping centre landlord story

Kudos to AMP for their promotion of a couple of products from one of my newsagencies in their Christmas catalogue for Knox City Shopping Centre.  It’s good to be promoted in this way along with other retailers, including majors.  Besides the sales bump the marketing will bring is the benefit of raising awareness of our newsagency brand to those who read the catalogue.  This nicely supplements our own marketing in the lead up to Christmas.

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newsagency marketing

Another newsagent walks away from a shopping centre

Another newsagent in  Melbourne walked away from their shopping centre tenancy last week.  He dropped the keys off at Centre Management and left the building mid lease.  The shop was relatively full of stock.

While there is no doubt that newsagents in shopping centres face extraordinary challenges, walking away is not an answer.  There are avenues of mediation, especially in Victoria.

Landlords are less concerned about the need for a newsagency today from what I hear.  This has been brought on in part by the behaviour of some shopping centre newsagents.

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retail leases

Maybe we should consider petitions to help with landlord challenges

Reading the story about the rent challenges facing independent book retailer St Mark’s Bookshop in New York made we wonder whether we should try their approach of having customers sign a petition of support.

While major landlords the world over have shown a reluctance to listen to anything, a petition may help in our situation should the rent dispute get to a tribunal or some other independent arbitrator.

Key to St Mark’s getting signatures is their well established tradition.  This comes down to the value their shoppers see in the business remaining.  I have shopped at St Mark’s.  It’s certainly a different, more personal and more enlightening experience than shopping for books at one of the big-barn corporate bookshops.

We need to ask is whether our customers would feel strongly enough about our newsagency businesses to sign a petition of support for us. If not then we need to think about what we can do to make our businesses that valuable in the eyes of our customers that they would sign a petition for us.

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Customer Service

Another newsagent walks from a shopping centre

This is becoming an almost weekly occurrence:  Another newsagent has decided to walk from their retail business in a relatively major shopping centre rather than pay a 10% increase in rent and fund the landlord required shop fit.

Some landlords are happy to accept this, and see families lose the businesses they have built up, often over many years, because there are those ready to take on a newsagency at the higher rent.  I have heard of cases where leeches are in the ears of landlord representatives long before a lease is up, as if encouraging the landlord to not offer the existing tenant a deal.

Other landlords accept a long term newsagent walking because they are ignorant of the newsagency economic model.

Newsagents in shopping centres owned by major landlords – AMP, Centro, QIC, Colonial First State, Westfield etc – need support from magazine and newspaper publishers, lottery businesses and the like to achieve more equitable rents. Otherwise we will see more shopping centres without newsagency businesses.

We need to stop families feeling so helpless that they walk away from their family business.

It takes a lot of guts to walk away from your business at the end of a lease.  This act alone speaks to the unfairness of lease terms and the competitive forces marshalled against the incumbent newsagent – sometimes including competitive forces of people closely aligned with the newsagency channel.

To read more about the cost of running a newsagency in a shopping centre, read Finding $17,500 extra gross profit this year, my blog post from August 17 about the cost of annual rent increases in shopping centres.

Newsagents facing a tough situation with their rent may have more options than they currently know.  For example, in Victoria there is the office of the Small Business Commissioner and VCAT which can be used to resolve tenancy disputes.  The Small Business Commissioner is specifically charged with helping resolve tenancy issues so that small business owners do not lose their businesses.  I have used this route with success.

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Newsagency management

Keeping your landlord in the loop

If you are tenant, in a shopping centre or not, it is vital that you keep your landlord appraised on what you re doing as a retailer which adds value to their centre.

Shopping Centre landlords are especially selfish and only care about the value of their property. This is why it is essential that you share every good story you have.  Here are some suggestions for landlord communication, there are items newsagents ought to send to Centre Management:

  • Newsletters. Each time you send a newsletter to your customers, include Centre management in your mailing.
  • Advertising. Send them a clipping of all ads you do.
  • Seasonal promotions. Email them a photo of any special seasonal promotion – showing the excitement you bring to the centre.
  • Press clippings. Work at getting quoted in the local newspaper.  Copy these stories and provide them to Centre Management.
  • In-store demonstrations or events. Each time you hos an in-store event, demonstration or the like, let your landlord know as this is evidence of you adding value to the centre experience.
  • Relay and refresh. each time you relay products like magazines or refresh your offer in some way, let centre management know – they could include this in their own shopper communication.

The more you communicate with your landlord about what you are doing in your newsagency the more valuable a body of evidence they will have should they be approached by another party to open a newsagency or take over your tenancy in the centre.

Banging your own drum to your landlord is a smart and vital move for any newsagent.

Some newsagents I have discussed these and related ideas with have expressed concern that they should not have to go after their landlord in this way.  The reality is that you do, it is vital to achieving better positioning when it comes time to discuss a new lease.  A proactive retailer is more valuable to a landlord.  Some landlords will not for themselves how proactive a retailer is.

We are accountable for the perception our landlords have of us.

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Newsagency management

Any newsagents out there had experience with QCAT on a retail lease dispute?

I’d be interested in hearing from any newsagents in Queensland who have taken a tenancy dispute to QCAT recently.  I have experience with the Office of the Small Business Commissioner and VCAT in Victoria for these matters and I want to compare the process to that available in Queensland.  Click here to find our about the QCAT shop lease disputes process.

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retail leases

A newsagent faces the loss of his business over a 35% rent hike

Following my post a couple of days ago about the 5% annual rent increase faced by most newsagents in shopping centres comes the news that a newsagent of at least 20 years standing is facing the loss of his business because he will not agree to the landlord’s offer of a new lease at a 35% premium to the current rent.

I can see no justification for such an increase.  The newsagent is fighting – but this takes time, money and stamina.

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retail leases

Landlords facilitate in your face competition

outpostw.jpgCheck out the placement of an outpost which confronted the team at one of my newsagencies when they came into work on Monday. A toy and book outpost by a fly-in fly-out tenant – in the shopping mall, right in front of our business which happens to have a toy and book offer at the front of the store facing into the mall.

Thankfully, the landlord moved them on Monday night. This should never have happened though. Landlords should take more care with placement of fly-in fly-out tenants.

Not everyone is as lucky as us with a landlord who listens and responds fairly.

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retail leases

Is your newsagency lease at risk?

Imagine that you have a year to go on your shopping centre newsagency lease, that you want to continue in a business you have successfully operated for the last, say, eleven years and that you have been a good tenant – paying on time, participating in promotions and running a professional shop.

Now, imagine how you would feel when your landlord advises that your rent is to increase 40% and that if you don;t accept they have another party prepared to pay this increase to operate the newsagency in the centre.

Alternatively, imaging how you would feel when this other party which has convinced the landlord that a newsagency can generate greater rent for them comes to you and tells you to join with them otherwise you lose the business.

Newsagents in shopping centres are at risk of being priced out of their businesses.  This is a challenge not only for these victims of secret negotiations between landlords and other parties but also for the newsagency channel more widely.

One of the reason newsagents go broke and newsagencies close doors in shopping malls is that the base rent is too high.  The people negotiating are sometimes removed from actual responsibility for paying the rent.

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Newsagency challenges

When a landlord competes with a tenant

Shopping centre property giant Westfield is to compete with small business newsagents by opening Ticketek ticketing agencies at customer service desks in its shopping centres, in competition with many small business newsagents offering Ticketek in these sames centres.

Despite being open for longer hours than centre management customer service desks, Westfield prevailed upon Ticketek to permit the opening of these new businesses in competition with incumbent newsagents.

I wonder if Westfield is paying the usual fee for each new sales location which newsagents have to pay?

Landlords hold the permitted use clause in a tenancy lease to control what we can offer in our newsagencies.  You either buckle to their interpretation of what you can sell or face a raft of penalties to your business.  They say the permitted use clause is there to protect your business as they will fight for you if someone tries to compete with our when their lease does not permit it.

What do you do when the landlord is the competitor, as is to be the case in many of the 37 Westfield shopping centres?

I feel for the newsagents affected.  I especially feel for those who are part of a marketing group which is inactive on this issue.

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Ethics

How much is a Woolworths or a Coles tenancy worth compared to a newsagency?

I have been sent tenancy data for a regional shopping centre which shows that one of the two largest supermarkets in Australia pays $292 per square metre while an independent newsagent is expected to pay three times that in rent.

The situation is even worse once you factor in that the major supermarket makes no contribution to outgoings – these are all covered in the small independent retailers.

The major supermarket has generous rent review provisions which small business retailers are all on anything from CPI + 1% through to a flat 5% annually.

The final kick in the guts to independent retailers at this regional shopping centre is in the area of lease term.  The major supermarket has a 20 year lease with two ten year options.  Independent retailers are given a five year lease and no option.

While I appreciate that there is a considerable difference between Coles and Woolworths and an independently owned newsagency, it is clear to me that we independents are funding the supermarkets.

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Newsagency challenges

Unfair shopping centre landlord behaviour

I was in a major shopping centre on the weekend and noticed a temporary outpost located just outside the newsagency selling several cheap no name brand Chinese import versions brand name products in the newsagency.

This is typical of some landlords. They demand premium rent for what they say is a premium shopping centre and then cheapen the experience with junk product outposts, especially at Christmas. It is appalling that they permit outpost traders to compete with long term and loyal tenants in this way.

Of course, the landlords will have their excuses, they always do.

This instance I saw was one of the worst because of the specific nature of the products being offered by the opportunist outpost operator.

Now before any of my landlords reach for the phone or keyboard to contact me thinking that I am writing about them, as is their want, I’d note that I do visit other centres.

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retail leases

Several factors hurting newsagencies in shopping centres

Some shopping centre landlords are not taking notice of newsagency sales data and are increasing base rent by as much as 75% without apparent justification.  Add to this increased competition from other retailers in shopping centres today compared to a few years ago, supermarkets, Australia Post to name two, as well as trading terms from suppliers which do not reflect the difference between a shopping centre newsagency and other stores and is it any wonder there are shopping centre newsagencies which are struggling.

The industry average gross profit for a newsagency is between 30% and 32%.  The average occupancy cost for a shopping centre newsagency is 15%, labour costs 12%, operating expenses are 5% and theft costs at least 2% and often more.  The labour cost of 12% usually does not include owner’s wages.

A note on the 15% occupancy cost – this aspirational for some newsagents who have occupancy costs closer to 25%.

One way to address this the shopping centre challenge is to diversify. However, the permitted use clause of the lease and an inflexible landlord can often get in the way of this.  I have seen situations where landlords have refused to allow newsagents to sell books, get into gifts or to offer homewares as part of a seasonal sale catalogue tiedback to magazine themes such as food.  At the same time landlords have permitted coffee shops to take on newspapers, Government owners posi offices to expand into stationery and supermarkets to take on papers and magazines.

With sales in core categories over which newsagents have no price or supply control, magazines, newspapers, cards and lotteries, down year on year, it is hard to see the justification for a landlord increasing rent yet it happens – usually 5% a year regardless of trading conditions.

The challenge, of course, is that as long as a landlord can find someone prepared to take on a newsagency at a higher than reasonable rent, they will sign them up and not renew the lease of a long term existing newsagent who will not accept an exorbitant (in their opinion) increase in base rent.

One only has to look at recent history in major shopping centres in Victoria, New South Wales and Queensland so see that this is what has happened.  A bullish negotiator talks up the landlord, says they can achieve a higher than industry average GP, the landlord believes this and signs them up for a nice premium.  The lease is handed (sometimes maybe forced) to an operator who is pumped up by the promoter and sooner or later they close, sometimes losing the family home along the way as has happened recently. The ‘promoter’ walks away unscathed and does it all again.

Publishers, magazine distributors, industry associations and other stakeholders who want to see newsagencies to continue to operate in shopping centres need to do more work educating landlords about fair rent.  Too many newsagents of long standing lose their businesses at the end of their lease.  Too many make barely minimum wage during their time of ownership of the business.

I’d like to see an open forum with landlords and stakeholders to educate all parties and to co-operatively seek a solution which sees newsagencies thrive in shopping centres and deliver an equitable return on investment for the newsagents.

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Newsagency challenges

Liking the smaller format newsagency

newsxpress-forest-hill1.JPGWe are 13 days into our new temporary location so I figured it is time to provide an update on the downsizing experience so far.

To recap, we have gone from a 330 sq metre shop on level two of Forest Hill Chase, located near a busy entrance, to a 97 sq metre shop on level one, toward the middle of the centre. This move has been brought about because of major construction to level three which is impacting on the tenancy we were in on level two.

We have cut range in some key departments: magazines (range cut by 33%), stationery (80%), party supplies (50%), social stationery (65%), books (50%) and cards (25%).

Looking carefully at the sales data from the last 13 days, numbers for key departments are as follows:

  • Magazines – down 20%.
  • Newspapers – down 10%.
  • Lotteries – down 20%.
  • Cards – up 20%.
  • Stationery – down 33%.
  • Books – down 20%.
  • Ink – the same.

We have had Halloween out for a week and my feeling is that we will do better in this new location than we would have done upstairs. I expect the same for calendars and diaries.

The card number will increase further as the range settles. As part of the move we have had around 10% empty pockets. That is fixed tomorrow. The biggest change with cards was the balance between everyday and lifestyle. We have cut lifestyle by more than 50%.

I expect magazines to increase as well as we finesse the layout and improve the shopper experience.

Our occupancy cost has temporarily been but by 68%. Our labour cost has been cut by 15% and that is expected to fall further as the roster settles.

As regulars to the centre find us (yes we have signs at our old locations as well as elsewhere in the centre) I am confident that magazines will climb back to within 10% of our regular numbers, newspapers back to 100% and lotteries very close to 100%.

One challenge this past week has been the more than 160 boxes of deliveries – diaries, calendars and more Halloween stock. We have had to offload some of this to other stores and get even more creating in how we display stock in our own store.

I like the smaller format store a lot. Sure we are short of space and cannot present as a truly full service newsagency. We have been able to surgically cut stock without killing off the core of the business. The department which has taken the biggest hit is stationery but maybe it needed that given what we are achieving from just 20% of the range.

The smaller store has more of a vibe to it.  Yes it is cramped but everyone is enjoying this with good humour.   The biggest space problem from a customer perspective is shopping trolleys.  We don’t have room to accommodate them and this is costing some business.  I am not a fan given that they block the store, even in the old location.

Best of all, considering the revenue changes, the smaller format has a considerably lower occupancy cost.  This has to be the goal of every newsagency in a shopping centre.

With shopping centre rent per square metre being so high and increasing between 5% and 7% a year regardless of CPI, in future I will prefer newsagencies of 130 sq metres or less. A smaller store in a better location is more valuable. The exception of course would be a newsagency in the perfect high-traffic location in a AAA class shopping centre.

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Newsagency opportunities

When your lease gets in the way of growing your business

cufflinks.JPGThese cufflinks are an ideal add-on to a card purchase.  The pair on the left are an ideal graduation gift for a male while the pair on the right make a nice Father’s Day gift.  Some newsagents in major shopping centres are facing a challenge from their landlord when they try and add items like cufflinks to their gift range since their leases do not explicitly state that they can sell gifts.

All it takes is a complaint from another tenant to get the landlord interested.  In my experience, the landlord tends to side with the more valuable tenant.

I have see situations where the extent of gifts is the store is explicitly limited to a percentage of turnover or floor space.  I have seen the same restriction on confectionery and even books – all traditional lines for newsagents.

A permitted use clause which states that you can carry traditional newsagency lines could be problematic at some point as it is open to interpretation as to what constitutes traditional newsagency lines.  In one case recently, the landlord said that books were not a traditional newsagency line.  The cost of mounting a case to prove otherwise was considerable.

In today’s rapidly changing marketplace, newsagents need to negotiate an appropriately flexible permitted use clause in their lease.  That said, landlords need to be fairer in managing permitted use.  I bet Australia Post did not have greeting cards, gifts, books and even BBQ sets covered in their permitted use clauses yet there was probably no push back.

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Gifts
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